1. ADB’s Assistance for PPP’s in India On-Going & Proposed Initiatives
Anouj Mehta
Senior Infrastructure Finance Specialist
(Public Private Partnerships)
ADB’s Assistance for PPP’s in India On-Going & Proposed Initiatives
26-27 February 2009, Bhopal,

2. BACKGROUND: Growth Fuelled Infrastructure Pressures
Years of Investment Lags
Rapid economic growth
Rapid Urbanisation
POWER
Severe
Capacity
Pressures On
All
Sectors
Population, Income & Consumption Levels Growth
WATER
TRANSPORT
GDP Growth at 8.7% average last 5 years in India
Railways grew at 9% freight / 8% passenger traffic last 3 years
SECTORS
SOCIAL

3. BACKGROUND: Huge Investment Needs Estimated at
US$ 500 billion over next 5 years
Sectors
US $ billion
Sectoral Shares (%)
Sector-wise Public (%)
Sector-wise Private (%)
ELECTRICITY
150.37
30.2
73.6
26.4
ROADS
81.24
16.3
66.2
33.8
TELECOMS
65.12
13.1
RAILWAYS
62.20
12.5 83 17
PORTS
18.03
3.6
26.3
73.7
AIRPORTS
8.46
1.7
25.8
74.2
WATER SUPPLY & SANITATION
48.57
9.8
97.3
2.7
IRRIGATION
52.98
10.7
100 --
OTHER – Storage / Gas
10.46
2.1
50/82.4
50/17.6
TOTAL
497.55
100.0
70.8
29.2
70,000 MW Capacity / Coverage expansion
6,500 km Golden Quadrilateral / North-South
and East-West corridors / 11,113 km Nat.
Highways / 1,000 km Expressways / 7,616 km
National Highways in North East
Dedicated freight corridors
10,300 kms of new railway lines
21 stations’ modernisation
485 MT in major ports
Over
A huge ask of private sector

4. Not Just Funds…….but also
EFFICIENCIES
Poor Tariffs,
Cost Recoveries &
Financial
Sustainability
Poor Institutional
Structures
SUSTAINABLE
INFRASTRUCTURE
Outdated MIS and FM
Systems
DIVERSE
FUNDING
SOURCES
EFFICIENT
USAGE OF
ASSETS
EFFICIENT
DEMAND
MANAGEMENT OF
RESOURCES
Weak Incentives
IDEAL
Majority Public
Large T&D / NRW
Losses
Large Wastages
REALITY
Parts of India
1 million irrigation wells added each year
Groundwater withdrawals exceeding annual recharges
Increased salinity
Fluoride & arsenic contamination
Deepening wells
Increasing impact on natural resources which are fast depleting
Interlinked – Efficient, predictable, financially sustainable enterprises will attract diverse funding options

5. Typical Situation Implications
Less than 135 lpcd supplied – even the above 100 lpcd hugely un-even
Coverage poor
Sewerage situation even worse
WILL GET WORSE as population increases
Bulk water sources under severe pressure – looking for sources 50 kms away from city now
Investments of Rs crores required in BWS, Distribution etc
Even the 4 buckets a day will fall to 2 if nothing is done!!

6. Funding?? Normal focus will be To enhance bulk water
Find investments from government for capex
JNNURM – limited supply
Commercial finance – limited
SUSTAINABILITY is the key – both JNNURM and banks want that for lending
Certainly not sustainable!!

7. Phase in a PPP Solution Focus is not just funds but IBM: PPP Phase in
Institutional ring fencing and efficient delivery
Benchmarking and measuring performance improvements
Managing for MAINTENANCE not just CAPEX
PPP Phase in
Short term for technical baseline development, institutions development and revenue enhancements - for improving financials and confidence
Medium term for expansion and larger capex investments

8. ADB Assistance for PPPs

9. PPP is seen as one key solution Need for an Enabling Environment
Attract FRESH FUNDS into sector
Develop Utility Institution’s EFFICIENCIES
Need for an Enabling Environment
P S S T
Faster response to CONSUMERS P
Policy Strengthening S
Strong Stakeholder Capacities S
Supply of long term funds T
Trust Amongst ALL Stakeholders
Policy for private – domestic & foreign investment
Regulation & Monitoring
Incentives for PPP’s
User charges policies
Viability support
Local and central government capacities to contract with and monitor PPPs
Good transaction advisory support
Good domestic contractors / operators
Long term to match long gestation infrastructure
Competitive and risk based
Strong domestic funding institutions with risk analysis ability
Awareness for all – ee’s, consumers, private players
Transparency in process
Participatory processes
Government of India is quite far seeing in many of these areas and there is already a strong interest from regional governments in trying to understand the wealth of initiatives that govt of India is taking for PPPs
ADB is supporting several of these initiatives at the request of Government of India

10. ADB’s Support to Government of India for Mainstreaming PPPs
Follows the Value Chain
Technical Assistance (TA)
- Funds
- Expertise
Catalytic Lending Products
- With & Without Recourse
Co-financing
Credit enhancement products
Awareness & Capacity Building
Sector Specific PPP Policy Development
PPP Project Structuring – Demonstration Projects
Lending Window for PPP Projects
Non / Sub Sovereign Facility
For all stakeholders
Frameworks for PPP
Good early precedents
Catalytic risk sharing funds

11. ADB Initiatives: Capacity Building - State Level
TA 4890: Mainstreaming PPP at State Level (on-going)
SCOPE
$ 3 million Technical Assistance program
Further $2 million in final stage of Board approval – approved already by President
Focused on 15 states
FOCUS: Strengthening PPP Cells and Capacities by a) providing PPP and MIS in-house consultants for an extended period and b) access to legal advisory services
PREPARATORY: PPP constraints identification, PPP Frameworks and policies development
CAPACITY DEVELOPMENT: Training, manuals, good practices, improving systems for bid document and project appraisals, risk management systems
INSTITUTIONALISATION: MIS development, consultations with stakeholders, quality checks and improvements on PPP/bid documents, project pipeline conceptualisation and supervision of projects

12. ADB Initiatives: Capacity Building - State Level
TA 4890: Mainstreaming PPP at State Level (contd.)
STATUS
13 PPP Specialists – 12 states and DEA
14 MIS specialists appointed – 14 states and DEA
A Legal Advisory Panel
A large number of activities are taking place within the PPP Cells:
Workshops and training activities – including on risk, capacity development, sector focus (urban, health, education), etc
Exposure Visits and consultations with private sector and international governments
Value added assistance being provided by cells to projects from across sectoral departments and ministries in project risk structuring, improving bid documents
Assistance being provided for financial closure including VGF applications
Development of action plans for project pipeline development – urban, health, education
Several project concepts for PPP projects are being developed within the states for further DEA / ADB assistance
Tremendous Response from States

13. ADB Initiatives: Capacity Building - Central Level
TA 4993: Mainstreaming PPP at Central Line Ministries (on-going)
SCOPE
$ 2 million Technical Assistance program
Focused on 6 line ministries
Strengthening PPP Cells and Capacities
FOCUS Strengthening PPP Cells and Capacities by a) providing PPP and MIS in-house consultants for an extended period and b) access to legal advisory services
PREPARATORY: PPP constraints identification, PPP Frameworks and policies development
CAPACITY DEVELOPMENT: Training needs assessments, training, good practices inculcation, improvement in systems for project appraisals and bid processes
INSTITUTIONALISATION: MIS development, consultations, quality checks and improvements on PPP/bid documents, project pipeline conceptualisation and supervision of projects

14. ADB Initiatives: Sector Specific PPP Policy Assistance
Health & Education PPP Frameworks (TA 4890 Related)
SCOPE
Assistance provided for developing a PPP Framework for Health and Education
KPMG Consultants recruited
Cross sector-division ADB team worked with DEA (SAGF, SAUD, SANS)
ACTIVITIES
Consultation Visits with 5 states - T.N., Orissa, Uttarakhand, Rajasthan, A.P.
ADB-KPMG Consultants Report Produced
6 PPP Models Identified
Framework for PPP development outlined
Consultation Workshops on Draft Report held - Ahmedabad & Panjim (February and April) 2008
Workshop to evolve project concepts held - Panjim, April 08 – leading to a proposed concept pipeline of 20 projects
Assisted by PPP Cells in co-ordination and workshops – now assisting on project proposal development
Meetings being held with DEA and ADB for structuring projects and taking to market
Urban PPP workshops for all states held in Jaipur and Hyderabad in October 2007 (cross ADB divisions)
States developed action plans for PPP projects
Follow up activities co--ordinated by PPP Cells leading to pipeline of over 20 PPP project proposals from states
Tremendous interest from states in developing projects further in a challenging area

15. ADB Initiatives: PPP Project Structuring Assistance
TA PPP Pilot Projects Initiative
CONCEPT
Projects being evolved in the PPP Cells and across states and sectors
Need for assisting in structuring good pilot PPP projects
Create “demonstration” models
Allows for replication across country
ADB presence will improve risk perception
Catalyse private sector involvement
List of potential projects for TA already identified by DEA with assistance from PPP Cells – further can be added on
TA will leverage ADB TA funds with GOI development funds (IIPDF) to quickly provide transaction advisory and project preparation assistance to PPP proposals
Flexible, value added, quick response modality – first such TA from ADB

16. THANK YOU
For inquiries: Anouj Mehta Tel No.: /5968 Fax No.: